09-006008PL Department Of Business And Professional Regulation, Division Of Real Estate vs. Lonzie Burgess Status: Closed Recommended Order on Friday, April 30, 2010.

Summary: Clear and convincing evidence proved realtor/broker violated ?475.25(1)(b) by concealment, dishonest dealing, breach of trust in secretly moving tenant into townhouse. Evidence did not prove lapsed registration, withholding money, or negligent listing.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 09-6008PL

)

LONZIE BURGESS, )

)

Respondent. )

)

RECOMMENDED ORDER

As noticed, Administrative Law Judge John D. C. Newton, II,

of the Division of Administrative Hearings conducted a hearing

in this case on January 26, 2010, by video teleconference at

sites in Fort Lauderdale and Tallahassee.

APPEARANCES

For Petitioner: Patrick James Cunningham, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N801

Orlando, Florida 32801

For Respondent: Lonzie Burgess, pro se 1

2925 Southwest 133 Avenue

Miramar, Florida 33027

STATEMENT OF THE ISSUES

The four count Administrative Complaint presents the following issues:

1. Whether Mr. Burgess is guilty of concealment, dishonest

dealing by trick, scheme or device, culpable negligence, or

breach of trust in any business transaction in violation of

Section 475.25(1)(b), Florida Statutes (2007). 2

2. Whether Mr. Burgess operated as a broker without being

the holder of a valid and current license as a broker in

violation of Section 475.42(1)(a), Florida Statutes and,

therefore, in violation of Section 475.25(1)(e), Florida

Statutes.

3. Whether Mr. Burgess failed to ensure his brokerage

corporation had a current registration with the Department in

violation of Florida Administrative Code Rule 61J2-5.019, and,

therefore, in violation of Section 475.25(1), Florida Statutes.

4. Whether Mr. Burgess is failed to account or deliver to

the Bells any property or assets which has come into his hands

and is not his property and which he is not entitled to retain,

in violation of Section 475.25(1)(d)1, Florida Statutes.

PRELIMINARY STATEMENT

In June 2009, Petitioner, Department of Business and

Professional Regulation, Division of Real Estate (Department)

issued a four count Administrative Complaint against Respondent,

Lonzie Burgess (Mr. Burgess). On July 30, 2009, Mr. Burgess

served a Request for Formal Hearing. On November 2, 2009, the

Department filed the Request for Hearing and a Notice of

Withdrawal as Counsel (for Mr. Burgess) with the Division of

Administrative Hearings (Division). That same day the Division

issued an Initial Order asking the parties to provide suggested

hearing dates and the estimated length of the final hearing.

Mr. Burgess did not respond. The Department did.

The Division noticed the final hearing for December 17,

2009. On December 4, 2009, Mr. Burgess moved to continue the

final hearing to, among other reasons, provide additional time

to retain counsel. The Division re-scheduled the hearing to

January 26, 2010.

At the start of the final hearing, Mr. Burgess moved to

continue the hearing again for purposes of retaining counsel.

His motion was denied. Fla. Admin. Code R. 28-106.210.

When the hearing ended, Mr. Burgess moved to extend the

time for filing proposed recommended orders. The motion was

granted by order permitting the parties to file proposed orders

within 30 days of the date the transcript was filed. The

Transcript of the final hearing was filed on March 16, 2010.

On April 15, 2010, the Division received a package of

documents relating to this case. They included three pages that

appear to be a letter from Mr. Burgess to his attorney,

communications to various Department employees, and a written

statement that appears to be by Mr. Burgess. The Division

treated these documents as an ex parte communication violating

Florida Administrative Code Rule 28-106.104. It issued a Notice

of Ex Parte Communication and provided copies of the documents

to all parties. The undersigned has not considered the

documents in issuing this Recommended Order.

The Department presented testimony from the following

witnesses: Felix Mizionznikov, Nell Bell, Willis C. Bell, and

Laurence Lindner. Mr. Burgess did not testify. He presented

testimony from Felix Mizionznikov.

The Department offered the following exhibits, all of which

were admitted into evidence.

1. Certification Summary.

2. Exclusive Right of Sale Listing Agreement dated

October 3, 2006.

3. Lease Between Kenay Horne and Willis C. and Nell F.

Bell dated October 8, 2007.

4. Remedy of Rental.

5. Division of Real Estate Investigative Report.

Mr. Burgess offered no exhibits.

Both parties submitted proposed recommended orders.

FINDINGS OF FACT

Clear and convincing evidence establishes the following

findings of fact:

1. The parties agree that Mr. Burgess is now, and has been

at all times material to this case, a Florida licensed real

estate broker, holding license number 701456.

2. Mr. Burgess's business relationship with Willis C. and

Nell F. Bell (the Bells) began in 2002 and 2003. In those years

he served as realtor in selling a duplex and buying a house

located at 42 East Drive, North Miami Beach, Florida. Later the

Bells paid Mr. Burgess $1,000 to assist with re-financing the

house.

3. In the following years, Mr. Burgess borrowed money from

the Bells.

4. The Bells knew little about real estate and the real

estate business. They trusted and relied upon Mr. Burgess, and

he knew that.

5. Mr. Burgess entered into a contract with the Bells to

sell a townhouse located at 648 Northeast Second Street,

Homestead, Florida. The contract is titled “Exclusive Right of

Sale Listing Agreement” and dated October 3, 2006. The contract

identifies Mr. Burgess as an “Authorized Listing Associate or

Broker.” It gives Mr. Burgess the exclusive right to sell the

Bells’ property and obligated him to market and sell the

property. The contract identifies the sale price as

$310,000.00. The contract term is October 3, 2006 to April 3,

2007.

6. The first sentence of the contract identifies the

parties as the Bells (Sellers) and Mr. Burgess and World Realty

(Brokers). Mr. Burgess signed it as “Authorized Listing

Associate or Broker.” The signature area identifies the

Brokerage Firm Name as Beachfront Realty, Inc.

7. The Bells purchased the Homestead townhouse at Mr.

Burgess’s urging. He convinced the Bells that buying the

Homestead townhouse was a good real estate investment.

8. Mr. Burgess also loaned the Bells $3,000 or $3,500 to

help them purchase the property.

9. Mr. Burgess did not succeed in finding buyers for the

property.

10. Mr. Burgess proposed to the Bells that they rent the

property. He repeatedly offered to locate a tenant for them.

11. For some time the Bells resisted the idea because of

concerns about wear and tear and possible damage to a new

townhouse. Finally they agreed.

12. Mr. Burgess identified a tenant, Ms. Kenya Horne. He

repeatedly told the Bells that Ms. Horne’s occupation and lease

of the townhouse were dependent on approval to participate in a

government rent support program.

13. Mr. Burgess prepared and the Bells executed a lease

with Ms. Horne for the period beginning October 8, 2007 and

ending September 30, 2008. It provided for lease payments of

$1,300.00 per month and a security deposit of $1,300.00.

Mr. Burgess signed the lease as a witness.

14. But the Bells told Mr. Burgess that they did not want

Ms. Horne to take possession of the townhouse until they met and

approved her.

15. Mr. Burgess agreed. He repeatedly assured the Bells

that he would not give Ms. Horne possession of the property

until they had met and approved of her.

16. Also Mr. Burgess repeatedly advised the Bells that

Ms. Horne had not moved into the property because she could not

obtain needed approval for rent assistance.

17. These assurances were false. Despite his repeated

assurances and statements, Mr. Burgess gave the tenant

possession of the property. She lived there four or five

months.

18. During the same time period, while the tenant occupied

the property, Mr. Burgess was telling the Bells that Ms. Horne

had not obtained rent assistance and that renting the property

to her was not going to work.

19. He never told the Bells that the tenant moved in. And

he never gave the Bells any rental payments or a deposit or made

any arrangements for them to receive rental payments or a

deposit.

20. Uneasy about matters, the Bells traveled with Laurence

Linder, a friend who was a real estate broker and insurance

salesman, to Homestead to inspect the townhouse. They found

that the property had been occupied and damaged.

21. The damage included holes in several walls and fire

damage in the kitchen. The stove and microwave were destroyed.

The carpet was damaged.

22. The Bells called Mr. Burgess from the townhouse and

asked him how the property was.

23. Mr. Burgess did not know that the Bells were at the

townhouse. He told them it was in fine shape.

24. When the Bells told Mr. Burgess that they were in the

townhouse, he broke down and cried and admitted he had let

somebody live there without telling them.

25. When the Bells confronted Mr. Burgess with his actions

and the damage, Mr. Burgess admitted deceiving the Bells about

the tenant and her occupation of the townhouse. He promised to

make restitution for the damage.

26. Mr. Burgess signed a document titled Remedy of Rental.

In it he agreed to do the following:

A. Pay the City of Homestead’s final

outstanding utility bill of $1,700 on or

before March 14, 2008.

B. Pay the Bells $4,600 to repair damage

and an additional $2,000.

C. Pay the Bells $5,200.00, the rental

amount from October 2007 to January 2008, on

or before April 11, 2008.

D. Pay all amounts by certified or cashiers

check.

27. Mr. Burgess did not make any of the payments agreed to

in the Remedy of Rental.

CONCLUSIONS OF LAW

28. Subsection 120.57(1) and Sections 120.569 and 120.60,

Florida Statutes (2009), grant the Division jurisdiction over

the parties and subject matter of this cause.

29. The Department must prove the alleged violations by

clear and convincing evidence. Dep't of Banking & Fin., Div. of

Sec. & Investor Prot. v. Osborn , 670 So. 2d 932 (Fla. 1996).

Clear and convincing evidence must be credible. The memories of

witnesses must be clear and not confused. The evidence must

produce a firm belief that the truth of allegations has been

established. Slomowiitz v. Walker , 429 So. 2d 797, 800 (Fla.

4th DCA 1983). Evidence that conflicts with other evidence may

be clear and convincing. The trier of fact must resolve

conflicts in the evidence. G.W.B. v. J.S.W. (in Re Baby

E.A.W.) , 658 So. 2d 961, 967 (Fla. 1995).

Count One

30. Count I charges a violation of section 475.25(1)(b),

Florida Statutes. That statute makes concealment, dishonest

dealing by trick, scheme or device, culpable negligence, or

breach of trust in any business transaction an offense for which

the Department:

. . . may place a licensee, registrant, or

permittee on probation; may suspend a

license, registration, or permit for a

period not exceeding 10 years; may revoke a

license, registration, or permit; may impose

an administrative fine not to exceed $5,000

for each count or separate offense; and may

issue a reprimand, and any or all of the

foregoing. . . .

31. Mr. Burgess committed this offense. His dealings with

the Bells on the rental of the townhouse were dishonest. He

deliberately and repeatedly concealed important facts from them.

And he breached their trust in their business transaction.

32. The Department also argues that Mr. Burgess placed the

wrong folio number for the townhouse in the Multiple Listing

Service. This error, it maintains, impaired selling the

property and amounted to culpable negligence.

33. Clear and convincing evidence does not establish that

Mr. Burgess placed the wrong folio number in the Multiple

Listing Service or that placing the wrong folio number in the

listing would amount to culpable negligence. The only evidence

that Mr. Burgess put in the wrong folio number is the testimony

of Mr. Laurence Linder about what a document reportedly said.

The document was not offered into evidence.

34. Mr. Linder’s testimony is also the only evidence

advanced to support the Department’s culpable negligence theory.

Mr. Linder’s testimony is not clear and convincing for two

reasons. The first is the minimal information provided about

his qualifications. The second is his plain hostility to

Mr. Burgess and the way in which he testified, acting as an

adversary and an advocate rather than an impartial expert.

Count Two

35. Count II charges a violation of Sections 475.25(1)(a)

and 475.25(1)(e), Florida Statutes, by operating as a broker

without holding a valid and current broker license. The

Department did not present clear and convincing evidence

sufficient to support a finding of fact establishing this

violation.

36. The Department’s investigator testified about what he

saw in the department records. The Department’s Exhibit 1 is a

“certified” summary of information in the records of the

Division of Real Estate, Department of Business and Professional

Regulation. The investigator’s testimony was his report of what

he saw recorded by others in files. The “certified” statement

is an out of court statement summarizing information in

documents placed in those documents by other individuals who

also did not testify. The statement author and the author of

the documents the statement summarizes did not testify. The

Department did not present any evidence that satisfied the

public record authentication provisions of Section 90.955,

Florida Statutes (2009) or the hearsay exception of section

90.803, Florida Statutes (2009).

37. In each case the evidence is hearsay as defined in

Section 90.801, Florida Statutes (2010), or testimony reporting

what a hearsay document says. A finding of fact may not be

based upon hearsay unless it would be admissible over objection

in civil actions. § 120.57(1)(c), Fla. Stat. (2009).

38. The Department did not establish that its hearsay

evidence would be admissible over objection in a civil action.

Also, if Exhibit 1 was intended to be a summary of voluminous

documents admissible under Section 90.956, Florida Statutes

(2009), the Department did not satisfy the notice requirement of

that evidence rule.

Count Three

39. Count Three charges that Mr. Burgess violated Florida

Administrative Code Rule 61J2-5.019, and, therefore, Section

475.25(1)(e), Florida Statutes, by failing to ensure that his

brokerage corporation had a current registration with the

Department. The Department did not prove this count for the

same reasons that it failed to prove Count Two.

Count Four

40. Count Four charges Mr. Burgess with a violation of

Section 475.25(1)(d)1, Florida Statutes. This section makes it

an offense to fail to account for or deliver personal property

including money if a civil judgment has been obtained against

the licensee and the judgment has to been satisfied in

accordance with its terms. The Department maintains that

Mr. Burgess failed to account for deliver rent and/or deposit

payments from Ms. Horne to the Bells.

41. Putting aside the issue of whether the statute

requires a civil judgment before there can be an offense, there

is no evidence that Mr. Burgess received any rent or deposit

money from Ms. Horne. Therefore, clear and convincing evidence

does not prove that he failed to account for or deliver rent or

to deposit money to the Bells.

42. Of the four counts charged, the Department proved only

Count I. Under that Count, the Department proved by clear and

convincing evidence that Mr. Burgess was guilty of fraud,

misrepresentation, concealment and breach of trust by

repeatedly, falsely assuring the Bells that Ms. Horne had not

been and would not be given possession of the townhouse.

Section 475.25, Florida Statutes (2007), makes probation,

license suspension, revocation, a reprimand, and a fine not to

exceed $5,000 possible penalties. 3

43. The Department adopted disciplinary guidelines for

violations of Section 475.25(1)(b), Florida Statutes, and

Florida Administrative Code Rule 61J2-24.001(3)(c). The Rule

provides: “In the case of fraud, misrepresentation and

dishonest dealing, the usual action of the Commission shall be

to impose a penalty of revocation.” The Rule permits

consideration of aggravating or mitigating circumstances. Fla.

Admin. Code. R 61J2-24.001(4). The rule lists examples of

aggravating circumstances, although not mitigating. They are:

(b) Aggravating or mitigating

circumstances may include, but are not

limited to, the following:

1. The degree of harm to the consumer or

public.

2. The number of counts in the

Administrative Complaint.

3. The disciplinary history of the

licensee.

4. The status of the licensee at the time

the offense was committed.

5. The degree of financial hardship

incurred by a licensee as a result of the

imposition of a fine or suspension of the

license.

6. Violation of the provision of Chapter

475, F.S., wherein a letter of guidance as

provided in Section 455.225(3), F.S.,

previously has been issued to the licensee.

44. The degree of harm from the one offense proven is

substantial. Mr. Burgess’s “Remedy of Rental” sets it at

$13,500. This is an aggravating circumstance to consider.

45. Although the Administrative Complaint charged four

counts, only one was proven. There is no evidence that

Mr. Burgess had a disciplinary history or letter of guidance.

The Department did not prove the charges about Mr. Burgess’s

license status. The lack of disciplinary history is a

mitigating factor.

46. Since Mr. Burgess did not present any evidence, there

is no evidence of the degree of financial hardship that would

result from a fine or license suspension. Both inherently

impose a hardship, however.

47. Although only one count was proven and Mr. Burgess has

no history of disciplinary offenses, revocation of his license

is the appropriate penalty. Mr. Burgess betrayed

unsophisticated consumers he knew relied upon and trusted him.

This is not a case of error, mistaken judgment, oversight, or

negligence. Mr. Burgess repeatedly and deliberately lied to the

Bells. His deceit and actions cost the Bells $13,500.00.

48. The Commission should also order Respondent, pursuant

to Section 455.227(3), Florida Statutes, to reimburse the

Department for its reasonable investigative costs in this case.

"Due process considerations require, however, that Respondent be

given the opportunity to examine and question the reasonableness

of such costs before any are imposed." Department of Health,

Board of Nursing v. Howard , No. 02-0397PL, 2002 Fla. Div. Adm.

Hear. LEXIS 1310 *10 (Fla. DOAH October 30 2002)(Recommended

Order).

RECCOMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law it is RECOMMENDED that the Department of Business and

Professional Regulation enter its Final Order finding

Respondent, Lonzie Burgess, Guilty of Count I; dismissing Counts

II, III, and IV; revoking Mr. Burgess’ license, and requiring

him to reimburse the Department for reasonable investigative

costs in this case.

DONE AND ENTERED this 30th day of April, 2010, in

Tallahassee, Leon County, Florida.

S

JOHN D. C. NEWTON, II

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 30th day of April, 2010.

ENDNOTES

1 / On March 3, 2010, Steven W. Johnson filed a Notice of

Appearance as counsel for Lonzie Burgess.

2 / All references to Florida Statutes are to the 2007 statutes

unless noted otherwise. The complaint does not specify the

statute year, the actions or inactions involved all occurred in

2006 or 2007. “The version of a statute in effect at the time

grounds for disciplinary action arise controls.” Childers v.

Dep't of Envtl. Prot. , 696 So. 2d 962, 964 (Fla. 1st DCA 1997).

For the offenses charged, save for a change in penalty addressed

later, the 2006 and 2007 versions of the statutes are the same.

Ch. 2006-210, § 3, Laws of Fla.

3 / The 2007 statutes, with the $5,000 penalty cap, apply because

all of the leasing related actions occurred in or after October,

2007.

COPIES FURNISHED :

Patrick J. Cunningham, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street

Hurston Building-North Tower, Suite N801

Orlando, Florida 32801

Steven W. Johnson, Esquire

Steven W. Johnson, P.A.

20 North Orange Avenue, Suite 700

Orlando, Florida 32801

Lonzie Burgess

2925 Southwest 133rd Avenue

Miramar, Florida 33027

Thomas W. O'Bryant, Jr., Director

Division of Real Estate

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N801

Orlando, Florida 32802

Reginald Dixon, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.